Saturday, May 15, 2004

Working Women and the Economy

I've seen several articles lately noting that more and more women are deciding to stay home with their children. This article sums up several sources of evidence:

According to the U.S. Department of Labor?s Bureau of Labor Statistics, the number of married working women with children under 3 years of age declined from 61 percent in 1997 to 58 percent in 2002, while the number of married working women with a child under age 1 fell from 59 percent in 1997 to 53 percent in 2002.
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Yet another study, done by the Boston-based Reach Advisors, indicates 51 percent of Generation X mothers were home with their children full time, compared to 33 percent of Baby Boomer mothers.

Or there's this article:

It's a trend being reported by publications from Time and the New York Times magazines to Atlantic Monthly, all backed by U.S. Census figures that indicate a drop among mothers in the work force who have a child under age 1.

That drop, from 59 percent in 1998 to 55 percent in 2002, is the first time the Census Bureau has seen a decline in that particular statistic since the agency started tabulating the figures in 1976. The biggest change is among well-educated white women over the age of 30, according to Time, which refers to a study that found 22 percent of mothers with graduate or professional degrees have opted to become stay-at-home moms.

I wonder what effect this trend has had on the GDP of the United States? After all, people who work outside the home draw salaries and spend money, all of which counts toward GDP. But people -- men or women -- who spend their time on homemaking and child-raising don't count at all. Their work is unpaid, and unpaid work doesn't count toward official statistics.

According to the Census chart found here, there were about 19.5 million children under 6 in 2002. I don't know how many of these were siblings of each other, but there were a lot of mothers involved. If a substantial number of them move out of the workforce and into household labor, that would have to affect GDP somehow.

How much? Studies show varied values for unpaid household work. An Australian study estimated the value of unpaid work at around 47% of GDP. A British study from 2000 stated that estimates range from 44% of GDP to 104%. This is obviously a wide range, and there must be quite a bit of uncertainty in the valuation mechanism, the time estimates, or both. Even so, the number is substantial.

How does this all play out? I don't know. If a genuine economic study exists, I'd love to hear of it. I'm just saying that it looks like more women have moved into precisely the sort of work whose value is huge but that is not counted toward GDP.

In that case, then, the amount of lost GDP would have to factor into one's assessment of the economic slowdown since early 2001. In other words, a slower economy may be in part due to the fact that more people are choosing to perform unpaid household work.

UPDATE: I found one study that examines the opposite effect: How much economic growth is really due to women moving from unpaid household labor into the marketplace? Here's the opening quote:

If one accounts for the shift of women’s work from the household to the market during the course of economic development, what does the trajectory of growth and structural change look like? Economists do not typically consider this aspect of economic development. But if a significant proportion of growth is propelled by such a shift, then analyses of growth will mistakenly attribute social and economic policies with production expansion when what is really happening is a sectoral shift.

And here's part of the conclusion:

Raising the market labor force participation of women, especially women with high levels of human capital (measured in terms of education and health) was a key feature of the Taiwanese miracle.

9 Comments:

Would need to take into consideration the economic times from 1998 to 2002. It was the height of the dot-com boom. Many women could stay home since their spouses where employed and the couples felt wealther (or affluent) due to the increasing value of investments.

I bet the trend has slowed since then due to stock market losses, higher unemployment rate, and a decrease in the competition for employees.

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